While Regulation Crowdfunding (Reg CF) is the “entry-level” option for raising up to $5 million, Regulation A+ (often called a “Mini-IPO”) is designed for growth-stage companies looking to raise significantly more capital—up to $75 million—from the general public.
Below is a breakdown of how it works and how it differs from the Reg CF framework we discussed.
🚀 Regulation A+ Overview
Regulation A+ allows companies to offer shares to both accredited and non-accredited investors across the country. Unlike a traditional IPO, the disclosure requirements are “scaled,” meaning they are less burdensome and cheaper than listing on a major exchange like the NYSE or Nasdaq.
The Two-Tier System
Regulation A+ is divided into two tiers. Most companies choose Tier 2 because it bypasses individual state regulations.
| Feature | Tier 1 | Tier 2 (Most Common) |
|---|---|---|
| Max Raise (12 Mo) | Up to $20 Million | Up to $75 Million |
| Investor Limits | None | Non-accredited: Max 10% of income/net worth |
| Financials | Reviewed (no audit req.) | Audited Financials Required |
| SEC Review | Yes | Yes |
| State “Blue Sky” Laws | Must register in every state | Pre-empted (Federal law rules) |
| Ongoing Reporting | Final report only | Annual, Semi-annual, and Interim reports |
🔑 Key Differences from Reg CF
If you are deciding between the two, here is why a company moves from Reg CF to Reg A+:
- Public Solicitation: Both allow you to “test the waters” (advertise to see if there is interest), but Reg A+ allows for a much larger scale of marketing.
- Liquidity: Shares issued under Reg A+ are not restricted. Unlike Reg CF (where investors usually must wait a year to sell), Reg A+ shares can technically be traded immediately if there is a secondary market or if the company lists on an Over-the-Counter (OTC) exchange.
- The “Qualified” Process: While Reg CF is a “file and go” process (you file Form C and start), Reg A+ requires a Form 1-A that the SEC must “qualify” before you can actually take any money. This usually takes 3 to 5 months.
📄 Form 1-A: The “Offering Circular”
Instead of the Form C used in crowdfunding, Reg A+ uses Form 1-A. This is a mini-prospectus that includes:
- Offering Circular: A detailed narrative of the business, management, and use of funds.
- Financial Statements: For Tier 2, these must be audited by an independent CPA for the two most recently completed fiscal years.
- Exhibits: Material contracts, bylaws, and legal opinions on the validity of the shares.
⚖️ Is Reg A+ Right for You?
Pros: * Raise up to $75M.
- Acquire thousands of “brand ambassadors” (retail investors).
- State-level registration is avoided (Tier 2).
Cons:
- High upfront cost ($50k–$150k+ for legal, audit, and marketing).
- Ongoing semi-annual reporting (Form 1-SA) and annual reporting (Form 1-K).
- SEC qualification is a rigorous back-and-forth process